Apple Stock Options Volume More Telling Than Apple Stock Volume

Apple Inc. (NASDAQ: AAPL) is having an active day with shares down 10% at $461 due to nearly 33 million shares having traded hands. That is already 1.5-times normal trading volume and investors have to be worried that the new 52-week low of $443.14 could be taken out. We also warned investors and traders alike for quite some time that if a meaningful bottom around $500 could not be put in that we expected nothing but dead air down to $425 to $440 based upon the past chart.

Today’s stock trading volume is one thing, but the stock options trading is another thing entirely. We have not looked at the options trading versus the stock volume trading for some time, but it is obvious that investors and speculators have continued to be using Apple’s stock options rather than the high share price of the stock to gain exposure. In just the weekly option expirations, we have seen some 156,000 contracts trade in the January Put options. We have also seen more than 120,000 in the weekly active call options. Again, those are just in the active contracts and there are more in some of the wider strike prices.

A not from Dow Jones “Market Talk” showed that options trading in the entirety was already at close 1 million stock options contracts and that compares to an average of about 675,000 contracts. If you see 1 million options contracts trade, this is representative of 100 million shares.

The only time we have seen Apple trade 100 million shares in a single day was when 120 million shares traded on January 23, 2008 when the stock was at $137.85. Our take is that Apple really needs to do a large stock split. Investors and traders have been using stock options rather than the expensive stock itself to get exposure, and that alone is not going to ever drive it shares back to the old highs.